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The scrub fire caught hold on the lower slopes of Cecil Peak, directly across Lake Wakatipu from Queenstown Bay, at 8pm last night.
It is now under control and rural fire crews and helicopters from Queenstown's council and the Department of Conservation are onsite damping down hotspots.
Police spoke to two men who disembarked from a boat in Queenstown Bay last night.
"The boat was seen speeding away from the area," senior constable Chris Blackford said.
"They were spoken to but denied any involvement. Inquiries are ongoing."
A total prohibited fire season is in force across the Queenstown Lakes District.
Once the cause of the fire is established, if those responsible can be identified, they will be liable for the costs of fighting the fire, the council's operations general manager Ruth Stokes said.
The large fire sent smoke billowing across the bay.
Before dark last night a helicopter was used to inspect the blaze and the surrounding area to check that no-one was in the vicinity.
Ms Stokes said no fire crews were sent to the site last night because the risk to life from fighting fires in the dark outweighed the need to bring the fire under control, given its remote location and the terrain.
There is no suggestion that the landowner had been responsible for the blaze, and everything else was speculation at this point, she said.
An aerial inspection at first light assessed the fire as being well under control.
DoC's incident controller Mark Mawhinney says the prevailing calm and humid conditions last night and forecast for this morning had minimised risk that the fire would have spread overnight.
The peak isn't home to any houses or residents but is the site of a newly unveiled high-altitude golf tee officially opened by Prime Minister John Key last week.
- Paul Taylor of Mountain Scene